If you are looking to invest in companies that have scalability and growth potential, invest in mid-cap stocks. Electing the best mid-cap stock from so many options can be difficult. For ease, you can just explore the BSE Midcap index which tracks the mid-cap stocks only.
In this article, let’s get into the details of the BSE Midcap index and the benefits of investing in this index.
What is the S&P BSE Midcap Index?
The S&P BSE MidCap index mirrors 15% of the S&P BSE AllCap’s total market capitalization, after the large-cap index. This index picks out the mid-cap stocks from the S&P BSE AllCap index.
At the time of annual rebalancing in September, stocks with a cumulative average daily total market cap after the 70% for the large-cap index, the next 15% are included in the BSE Midcap index.
The size allocations are determined by sorting the cumulative average daily total market capitalization of stocks in the S&P BSE AllCap index, from the highest to lowest value.
5 Things Investors Should Know Before Investing in BSE Midcap
Here is what investors should know.
- Passive Exposure
By purchasing a single unit of index funds or ETFs that have the underlying benchmark as the BSE Midcap or the BSE Midcap Select, you can passively get the exposure of a bundle of mid-cap stocks. For this easy diversification, you can invest in related index funds or ETFs on an Online Trading App like Dhan.
- Top-Picked Stocks
You can check out the list of the top BSE Midcap companies by their index in weight. As these stocks are given weightage in the index based on their free-float adjusted market capitalization, you can invest directly in these highly traded stocks.
- Long Term Investment
You can invest in the listed mid-cap stocks or index funds for long-term investment goals because, over 5 or 10 years, the individual stocks, or the overall index, can reach new heights. You can benefit from the price appreciation and fulfill your investment objectives.
- High Growth Potential
The stocks included in this index are from the mid-cap segment which has a high chance to become large-cap stocks. With their strong business model and trying to capture every coming market opportunity, their valuations can become really big, and hence you get a chance to capitalize on such growth.
- Real Time Price Update
The BSE Midcap share price which is around 48,000+ at present, changes on a real-time basis reflecting the true picture of the overall mid-cap segment. You can even get the trading price of the index in the Indian Rupee and US Dollar currencies.
The index is rebalanced in September every year and constituents are updated accordingly. Along with that, quarterly reviews also happen in March, June, and December.
Conclusion
BSE Midcap index includes the stocks from the mid-cap segment which are enlisted in the next 15% weightage of S&P BSE AllCap, after the large-cap index. The multiple benefits of the BSE Midcap index are exposure to index funds and top mid-cap stocks, fulfillment of long-term goals, and a real-time trading overview. To invest in stocks, consider Dhan.
